Announcing the SFOX Crypto Dark Pool

Since 2014, SFOX has been providing sophisticated crypto traders with a venue that gets them the best price on all trades with minimal slippage by connecting them to all major crypto trading venues from one account. Today, SFOX is proud to announce the addition of a powerful new tool to the SFOX liquidity family: the SFOX crypto dark pool.

For the first time in crypto, traders can trade strictly in a dark pool environment or have orders routed across the largest crypto exchanges, OTC providers, and a dark pool – in a single order – to get the best price.

SFOX traders have access to even deeper liquidity and the ability to trade large amounts of BTC and other cryptocurrency in a completely undetected environment. And the best part is that you don’t have to pay extra to use the dark pool. Read on to learn how SFOX’s crypto dark pool solves one of the biggest problems of sophisticated crypto trading.

The Problem: Big Trades Can Move the Market

A large buy or sell order—say, 500 BTC—risks moving the market against itself. If that kind of quantity suddenly appears on an order book, it has the potential to constitute a buy or sell wall all on its own, pressuring the price of the asset in the opposite direction as other market participants place maker orders closer to the top of the order book than the wall in order to stand a chance of actually getting filled.

Illustration of BTC sell wall.
The large sell volume for BTC around $12461 in this image could theoretically pressure the price downward, functioning as a “sell wall.” Source: SFOX trading UI.

SFOX’s advanced order types have always mitigated this issue by breaking up large orders into smaller pieces and routing those to the trading venue with the most competitive pricing, but even this kind of algorithmic smart-routing has its limits. The SFOX platform has been shown to incur virtually zero slippage on orders of 100 BTC or fewer, and we strive to provide that level of excellence with orders of all sizes—however, even if the order is spread across multiple trading venues, an order that is hundreds of BTC in size may attract the attention of other market participants.

Historically, traders moving large quantities of BTC and other assets have tried to ameliorate this problem by trading OTC—but OTC desks carry their own risks that can move the market against one’s order if one isn’t careful.

Especially if a trader is expecting a significant move in the market, this is unacceptable: there needs to be a way to take a position of all of one’s capital at once without undermining one’s position in the process.

The Solution: Fully Hidden Orders on the SFOX Crypto Dark Pool

SFOX’s new crypto dark pool is a fully covert source of liquidity. The orders posted to it aren’t discoverable on any order book or API datastream. When traders looking to buy or sell a large amount of BTC or another cryptocurrency post to the crypto dark pool, their order will execute just in case another order in the crypto dark pool matches with it, mitigating the risk of the market moving in response to one’s order.

There are five ways SFOX’s crypto dark pool gives SFOX traders even more edge in crypto markets:

  1. Strict Privacy and Trade Anonymously. Nobody can see into the darkpool. Whether they are a user or liquidity provider, the dark pool is completely hidden.
  2. No Slippage. Trade large block orders without slippage. Keep your objectives private from the public market and execute your entire order at your intended price.
  3. All the upside of dark pools with none of the downsides. Our advanced orders like Sniper, Polar Bear, and Gorilla will place your order in the dark pool while at the same time interact with the market.
  4. Everyone benefits, even the taker orders. If you’re placing a taker order on SFOX, your order will now automatically look at both SFOX’s integrated order book and SFOX’s crypto dark pool when finding the best execution opportunities. That means your SFOX account now has access to a new source of liquidity in addition to all leading cryptocurrency exchanges and OTC desks—and this new source, by design, houses some of the largest crypto orders you’ll find anywhere.
  5. No additional cost. That’s right: you don’t pay one sat extra for using the dark pool.

How to Use the SFOX Crypto Dark Pool

You can use the crypto dark pool by using SFOX’s Sniper, Polar Bear, or Gorilla advanced order types. They automatically work with the dark pool and will route your orders to the best possible exchange.

You don’t need to do anything special to benefit from the SFOX crypto dark pool: your order will automatically look at the dark pool in addition to all major crypto exchanges and OTC desks in order to find the best execution opportunity.

On the other hand, if you’re using a maker order type like Limit, Hare, or Gorilla, you now have the ability to choose whether you want to place it on SFOX’s integrated order book or on SFOX’s crypto dark pool. When creating your order, just click on the new “Destination” dropdown menu and choose between “Smart” (i.e. the integrated order book) and “Darkpool.”

Like a Whisper in the Night

The last thing a sophisticated crypto trading strategy needs is to accidentally undermine itself by telegraphing its moves across the market. With SFOX’s crypto dark pool, you can count on making your crypto trades undetected, no matter how large they are.

The SFOX crypto dark pool joins the likes of SFOX Atlas and trailing stop-loss orders on the list of rapidly expanding features SFOX is offering to the most advanced participants in the crypto market. Sign into the SFOX crypto suite and see what’s new for yourself.

Questions? Contact sales@sfox.com to learn more or schedule a demo.